How do I Open a Money Market Account?

N.M. Shanley

A money market account is an interest-bearing deposit account. To open a money market account, you can visit a branch of your local bank or credit union. Some of these financial institutions also allow accounts to be opened online. In the United States, a signed account application, valid identification, a social security number, home address, phone number, work address, and minimum opening deposit are needed to open a money market account. A background check is also required.

Banks will often set a minimum opening deposit amount in order to open an interest-bearing money market account.
Banks will often set a minimum opening deposit amount in order to open an interest-bearing money market account.

A United States law call the Patriot Act requires certain types of identification to open a money market account such as a valid driver's license, valid passport, or resident alien card. If you visit a financial institution to open a money market account, this identification must be presented to the staff member who is opening the account. To open a money market account online, information from the valid identification is typed in and sent to the financial institution over the Internet.

The Patriot Act also requires an Office of Foreign Assets Control (OFAC) background check before a money market account is opened. When a bank or credit union opens a new account, the account owner's information is checked against the OFAC database. OFAC background checks are completed electronically for accounts that are opened online. The OFAC database includes names of known terrorists and other persons and businesses that may not open bank accounts in the United States.

The minimum opening deposit is determined by the bank or credit union. In general, this is also the amount needed to continue to earn interest on the account balance and avoid paying a monthly service fee. Interest is most often paid monthly, but quarterly interest payments are also possible. Money market account interest rates are generally not guaranteed and may change at any time.

When an account is opened, important disclosures are provided. This information should include when an account can be closed and how interest will be paid. Money market accounts can usually be closed at any time without any loss of the principal deposit and credited interest. If an account is closed before the latest interest payment is credited, this interest may be lost. Some financial institutions will credit a partial interest payment prior to closing the account, but others will not.

In the United States, money market account disclosures will also include information about a federal regulation called Regulation D. Regulation D allows only six transactions per month without the account owner present. These withdrawals include checks, phone transfers, debit card transactions, electronic transfers, and automated clearing house (ACH) payments. Withdrawals completed in person, such as at a branch or at an ATM, do not count toward this monthly limit.

It's important to count transactions that fall under Regulation D. Of the six monthly Regulation D transactions allowed, only three of them may be checks, debit card transactions, or payments to third parties. Banks and credit unions usually charge a fee if the account owner exceeds these monthly withdrawal limits.

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